In the aftermath of Sept. 11, 2001, most financial firms have beefed up their disaster planning, but hedge funds are lagging behind in their preparations, the Financial Times reports, citing regulators and industry executives. Disaster recovery planning, says Greg Quanta, senior managing director in charge of Bear Stearns’ in-house hedge fund business, “runs the gamut from [having] no plan whatsoever to extremely well thought-out and well-executed plans. Those most at risk to suffer from catastrophe are small funds, suggests the FT, as anecdotal evidence correlates fund size with disaster continuity preparedness. In fact, according to the FT, one $12 billion AUM hedge fund in New York has its own back-up generator and satellite phone service. Quental told the newspaper that hedge fund investors should conduct due diligence on business continuity. “Everybody in the business has a good understanding that a lot of hedge fund failures are related to operating or infrastructure as opposed to investment strategy issues. Disaster recovery falls squarely in that operating category.” It seems that clients may hold a powerful key to a firm’s disaster planning efforts; investors may view such planning as an important factor as to whether to allocate to certain hedge funds.